Slattery v Dunn

Land and Environment Court (NSW)|2024-10-21|Before: Pepper J

The Applicant Claims Her Costs of Largely Abandoned Final Relief

This application concerns the entitlement of the applicant, Rhonda Slattery, in Class 4 civil enforcement proceedings commenced against David and Kim Dunn (together, "the Dunns"), to her costs in circumstances where the disposition of separate proceedings commenced by the first respondent, David Dunn, in Class 2 of the Court's jurisdiction, rendered the final relief sought in the Class 4 matter otiose, and which was accordingly abandoned by her.

At the hearing Slattery abandoned her claim for the costs associated with "travel, driving and parking".
I have determined that Slattery ought to be awarded her costs of the proceedings, including her costs of the costs hearing, payable on an ordinary basis.

The Respondents Sought to Vacate the Costs Hearing

A notice of motion returnable instanter seeking to vacate the costs application was filed in Court by the Dunns on 21 October 2024. It was supported by an affidavit from their legal representative, Monique Lewis, whose firm had only received formal instructions from the Dunns on 17 October 2024.
The vacation was sought on the basis that, first, instructions had been received late by the Dunns' solicitors and time was needed to prepare for the costs application, and second, because the Dunns had suffered prejudice by the late filing of Slattery's evidence.
I refused the motion having regard to ss 56-60 of the Civil Procedure Act 2005 ("CPA"), principally on five bases: 1. first, no reason was given for the late engagement by the Dunns of their solicitors; 2. second, Slattery's evidence, although late, was nevertheless served on 1 October 2024. No explanation for the passage of time between then and the filing of the motion to vacate was provided by the Dunns. It may reasonably be inferred that no attempt was made by the Dunns to prepare their evidence in reply during this, or any other, period. There was no evidence that they had done so; 3. third, at no point did the Dunns approach the Court to amend the timetable for the filing of their evidence or to complain about the late service of Slattery's evidence until the Court ordered mentions on 15 and 17 October 2024. The Court refused an oral application from the Dunns to vacate the hearing at the latter mention because it was opposed by Slattery, who was otherwise ready to proceed, and it was not in a proper form and was not supported by any evidence. However, the Court granted the Dunns until Friday, 18 October 2024 to file their evidence (the hearing was listed for Monday, 21 October 2024); 4. fourth, there was no detail of the purported "prejudice" that the Dunns claimed to have suffered by Slattery's evidence being five days late; and 5. fifth, the Dunns were not willing to pay the costs thrown away by the vacation, no doubt because Slattery was, by then, legally represented by counsel.
The costs of the motion were ordered to be costs in the cause.
The costs application was adjourned until 1.30 pm to allow the Dunns to prepare for the application. The Court urged the parties to resolve the matter in the interim, but to no avail.

The Procedural History

The chronology of events giving rise to the costs application is somewhat complex for what is otherwise, on any view, a simple dispute.
The parties live adjacent to each other, with a fence dividing the two properties. The Dunns wanted to replace the fence. It appears that the Dunns had obtained development consent to install a concrete driveway. An issue arose as to where the correct boundary between the two properties was located, with the Dunns relying upon a survey by Cahill & Cameron ("the Cahill survey"), claiming that the fence encroached onto their land. Slattery did not accept the accuracy of the survey, and moreover, considered the existing fence to be adequate. The Dunns wanted the fence to be moved to provide boundary offsets for their proposed development that were consistent with the approved plans.
The dispute escalated and Slattery, concerned about any consequential damage to two paperbark trees on her property and the security of her dogs, commenced proceedings in both the Supreme Court and this Court. The urgency was due to the fact that Slattery had received a letter from the Dunns stating that they would commence demolition of the boundary fence at 7.00 am on Monday, 9 October 2023.
Slattery commenced proceedings in this Court by way of summons on Sunday, 8 October 2023, seeking the following final relief: 1 Injunction or Orders to restrain and prevent demolition of the dividing fence between the properties identified as lot 165 DP 5350 and lot 164 DP 5350 until the matter is determined by the Court or as agreed. 2 Injunction or Orders to restrain and prevent any fencing works without orders from the Court or as agreed. 3 Injunction or Orders to restrain or prevent any damage by digging, scraping or cutting to the large paper bark trees located within property lot 164 / 5350 Davistown NSW unless consent and approval is granted by the relevant authority or as determined by the Court. 4 Any other orders the Court deems appropriate. 5. Costs.
By notice of motion filed that day, she also obtained the following interlocutory relief from Moore J as duty judge on 8 October 2023: The Court orders that David Dunn (the First Respondent) and Kerrie Dunn (the Second Respondent) are restrained by themselves, their servants, agents or contractors, from interfering with either of the paperback trees on 53 Mirren Avenue, Davistown (Lot 164 in Deposited Plan 5350), in the vicinity of, or located across, the boundary between Lot 164 in Deposited Plan 5350 and 51 Mirren Avenue, Davistown (Lot 165 in Deposited Plan 5350), prior to 5:00pm on Thursday, 12 October 2023; The Court orders that the First Respondent and the Second Respondent are restrained by themselves, their servants, agents or contractors, from demolishing any part of the concrete slab located on 53 Mirren Avenue, Davistown (Lot 164 in Deposited Plan 5350) in the vicinity of, or located across, the boundary between Lot 164 in Deposited Plan 5350 and 51 Mirren Avenue, Davistown (Lot 165 in Deposited Plan 5350), prior to 5 PM on Thursday, 12 October 2023; and The proceedings be transferred to the Supreme Court of New South Wales.
Slattery was not represented and the Dunns did not appear before Moore J, although I was informed from the bar table by counsel acting for Slattery that the Dunns had been notified of the interim application. Lewis did not cavil with the assertion.
Moore J then proceeded to transfer the proceedings to the Supreme Court because of a jurisdictional issue as to whether the Court could entertain the relief Slattery sought in relation to the fence.
Meanwhile proceedings were separately commenced by summons by Slattery in the Supreme Court on 8 October 2023, seeking identical final relief to that contained in the summons filed in this Court.
Again, on the same day and by notice of motion, Slattery sought interim injunctive relief in similar terms to that sought in this Court (the letter referred to in order 4 was not before the Court on the costs application): 1 Orders to restrain and prevent demolition of the dividing fence between the properties identified as lot 165 DP 5350 and lot 164 DP 5350 until the matter is determined by the Court or as agreed. 2 Orders to restrain and prevent any fencing works without orders from the Court or as agreed. 3 Orders to restrain or prevent any damage by digging scraping or cutting to the large paper bark trees located within property fol 164/ 5350 Davistown NSW unless consent and approval is granted by the relevant authority or as determined by the Court. 4 Or in the alternative, Order that the fence be modified in accordance with the terms and conditions as set out by letter dated 3 October 2023 in Option 1 or Option 2 or as determined or amended by the Court. 5 Any other orders the Court deems appropriate. 6 Costs.
The reason for the two sets of proceedings was explained by Henry J in the Supreme Court proceedings (Slattery v Dunn [2023] NSWSC 1205 ("Slattery SC") at [2]): [2] The plaintiff's application is made to this Court in circumstances where earlier today (a Sunday) the plaintiff commenced proceedings in the Land and Environment Court of New South Wales, and obtained urgent relief restraining the defendants from interfering with the paperbark trees on the plaintiff's property and demolishing any part of the concrete slab which is located in the vicinity of the boundary of the plaintiff's property and the defendants' property until 5.00pm on 12 October 2023. The Land and Environment Court transferred those proceedings to this Court in circumstances where it took the view that it did not have jurisdiction to grant the injunctive relief sought by the plaintiff on this application in relation to the fence.
The matter came before Henry J in her Honour's capacity as duty judge. Slattery appeared for herself and there was no appearance by the Dunns, notwithstanding that they were notified of the application. Her Honour delivered an ex tempore judgment and granted the interim relief sought by Slattery (Slattery SC (at [11]): [11] For these reasons, I make the following orders and notations: (1) Upon the undertaking of the Plaintiff to pay the requisite filing fee or obtaining deferment of payment of that fee from the Registry, grant leave to the Plaintiff to file in Court the Summons and Notice of Motion dated 7 October 2023, the affidavit of Rhonda Slattery dated 7 October 2023 and Exhibit RS-1 to that affidavit. (2) Upon the Plaintiff giving the usual undertaking as to damages, order that until 5.00pm on Thursday, 12 October 2023, David Dunn (the First Defendant) and Kim Dunn (the Second Defendant) be restrained by themselves, their servants, agents or contractors from trespassing or entering upon XX Mirreen Avenue, Davistown NSW 2251 at Lot 164 DP 5350 (Plaintiff's Property) and interfering with and damaging the existing dividing fence located on or in the vicinity of the contiguous boundary between the Plaintiff's Property and XX Mirreen Avenue, Davistown NSW 2251 at Lot 165 DP 5350 (Defendants' Property). (3) Pursuant to r 1.12 of the Uniform Civil Procedure Rules 2005 (NSW), the time for service of the Summons, Notice of Motion, affidavit of Rhonda Slattery and Exhibit RS-1 (Documents) together with a copy of these orders be abridged to 8.00pm on 8 October 2023. (4) Service of the Documents and a copy of these orders is to be effected on the Defendants by: (a) hand delivery of the Documents addressed to the Defendants at the Defendants' Property; and (b) by email to … attention David Dunn. (5) Note that Land and Environment Court proceedings 2023/123456 (LEC Proceedings) have been transferred to the Supreme Court of New South Wales and direct that the LEC Proceedings and these proceedings to be heard together. (6) List these proceedings and the LEC Proceedings before the Equity Duty Judge at 10.00am on Tuesday, 10 October 2023. (7) Liberty to apply to the parties on four (4) hours' notice (8) These orders be entered forthwith.
Both sets of proceedings (those filed in the Supreme Court and those commenced in this Court) were set down for further mention and transfer to this Court before Henry J on Monday, 10 October 2023.
On that occasion, the Dunns appeared in person and Kevin Tang of counsel appeared for Slattery. The two sets of proceedings were transferred to this Court.
The Court urged the parties to settle the proceedings, including by Court ordered mediation (see Slattery v Dunn [2023] NSWLEC 107 at [24], where the parties were not legally represented, and Slattery v Dunn (No 2) [2023] NSWLEC 128 at [21]).
These were regrettably all unsuccessful, with the consequence that the Court made orders extending the interim injunctive relief and setting a timetable to prepare the matter for final hearing, including the issuing of subpoenas and the preparation of evidence. This evidence included expert survey evidence obtained by Slattery from Terry Survey and Development Consulting dated 25 October 2023 ("the Terry survey"), which was necessary in light of the Cahill survey, upon which the Dunns continued to rely. Suffice to say that the Terry survey conflicted with the Cahill survey in respect of where the boundary ought to be between the two properties.
The Dunns therefore made an application to the NSW Land Registry for a boundary determination on 9 November 2023, in order to resolve the issue. This, and the fact that the Dunns foreshadowed Class 2 proceedings being filed under the Trees (Dispute Between Neighbours) Act 2006 and Dividing Fences Act 1991, resulted in several adjournments of the Class 4 proceedings until after the boundary determination had been issued (Slattery (No 2) at [20]).
The Dunns filed the anticipated Class 2 proceedings on 19 December 2023.
The boundary determination was issued on 22 February 2024.
The Class 2 application was heard by Douglas AC on 6 March 2024. The Acting Commissioner made the following orders on 17 June 2024 (Dunn v Slattery [2024] NSWLEC 1331 at [79]): [79] The Court orders that: (1) Within 90 days of the date of these orders, the respondent, at her expense, shall replace 6 posts and four panels of the common boundary fence, comprising the 2nd to the 7th post inclusive and the 3rd panel to the 6th panel inclusive, when considered from the fence's eastern end. The design of fence panels in alignment with trunks and roots of the trees shall be modified to accommodate the trees' existing basal flare and future trunk development. (2) In conjunction with the works in Order (1), the respondent, at her expense, shall employ an Australian Qualification Framework (AQF) level 5 arborist with appropriate insurances, to supervise or undertake excavation of all fence post holes, determine and approve the design of modified fence panels, and collaborate with fencing contractors with respect to the installation of modified fence panels. (3) Within 90 days of the date of these orders, the applicant, at his expense, shall replace the 8th panel of the common boundary fence when considered from the fence's eastern end. (4) Prior to any excavation, compaction, alteration of soil level, or any other construction activity within the Tree Protection Zones (per the Arborist Report from Michael Marley of Bellevue Tree Consultants, dated 2 March 2024), the applicant, at his expense, shall employ an AQF level 5 arborist with appropriate insurances to supervise all construction activity within the Tree Protection Zones, including the concreting. Should Mr Dunn prefer to employ an AQF level 5 arborist other than Mr Marley, Mr Dunn's chosen arborist shall be subject to prior approval by the respondent. (5) Should access be required to the other party's property to undertake works, each party shall provide all reasonable access, subject to at least 72 hours notice by email, advising the date and approximate start time of the works. (6) The works shall be completed during reasonable daytime working hours.
As reflected in the Acting Commissioner's judgment, the boundary determination indicated that the existing fence had encroached to a minimal degree on both properties; that the Cahill survey was erroneous; and that apart from the encroachments, the fence line was largely correctly located.
As a consequence of the orders made by the Court in Dunn, when the matter came before Pain J for further directions on 30 August 2024, the Court stood over the summons to 20 September 2024. The interim relief was not extended by her Honour.
On 20 September 2024 Slattery informed Duggan J that she no longer required the final relief sought in the Class 4 proceedings. A timetable was set to deal with the remaining issue of the costs of the Class 4 proceedings. That the relief contained in the summons was withdrawn was confirmed by Slattery when the matter was mentioned before the Court on 17 October 2024.

Offers to Settle the Proceedings

Both parties exchanged offers to settle the proceedings that were arguably offers of compromise under the Uniform Civil Procedure Rules 2005 ("the UCPR") or pursuant to the principles in Calderbank v Calderbank [1975] 3 WLR 586. It is necessary to set out the substance of these offers.
On 16 October 2023 Slattery served an offer of compromise on the Dunns in the following relevant terms: This offer is made without prejudice but may be tendered on the question of any costs in accordance with the principles in Calderbank v Calderbank [1976] Fam 93. … In an effort to reach an agreement and settle the dispute, I put forward a the following offer, in accordance with the guiding principles, an overriding purpose of section 56 of the Civil Procedure Act 2005 to resolve the matter on a just, quick and cheap resolution and to avoid incurring any future costs. … I note my request for the minimum amount necessary be shaved from the trees if they must be shaved but not more than 100 mm to tree one and no more than 200mm to tree two, in such a way as not to be visible (if possible my side) and after you obtain approval for the tree works and concrete cutting as required by Central Coast Council. Concrete cutting smooth edge - no more than 50 mm soil edge to fence to be filled with blue metal. I offer to settle the proceedings for the contribution by you towards my fees in the sum of $5,954.00 in full and final satisfaction of the costs the proceedings. Being for the SC and the LEC filing fees in the amount of $2654.00 (SC $1294.00 LEC $1104. And $256) and an amount of $3,300.00 for Counsel fees. The offer will remain open until 9 am Wednesday 18 October 2023. Should you not accept the offer, then I will rely upon this letter on the issue of costs, including an application for costs on an indemnity basis.
Another letter of compromise in almost identical terms (T36:21-23) dated the same day was also sent by Slattery to the Dunns (together, "the 16 October 2023 offers").
Both offers were expressed to be made pursuant to s 56 of the CPA. Neither referred to r 20.26 of the UCPR. Both offers expired at 9.00 am on 18 October 2023, that is, before the matter was listed before Pritchard J for mention on that date.
The first 16 October 2023 offer was rejected that day by the Dunns with a counter-offer that they would pay for the construction of the fence and pay $1,000 in exchange for the proceedings to be withdrawn with Slattery to provide written consent to the construction of the new fence.
The Dunns' offer was rejected by Slattery later still that same day on the basis that she had incurred more than $1,000 in costs. She repeated her offer dated 16 October 2023, with the relevant deletion of the sentence, "Concrete cutting smooth edge - no more than 50mm soil edge to fence to be filled with blue metal." In my opinion, nothing turns on the amendment.
A Calderbank offer was served on Slattery by the Dunns on 23 October 2023. Its salient features were that: We note the following recent events: - The most recent appearance in the Land and Environment Court on 18 October 2023. Your letters of compromise on 16 October 2023. Our clients' email of compromise on 16 October 2023. Your rejection of our clients' offer on 16 October 2023. We note the matter is listed before the Court on Tuesday 31 October 2023. The purpose of this letter is to seek to resolve these proceedings and avoid the need to progress to the hearing by making a settlement offer in accordance with the principles established in Calderbank v Calderbank [1975] 3 All ER 333. Our Clients' Offer Our clients' offer to resolve these proceedings is as follows: - 1. The fence be removed and replaced in accordance with the correct boundary line that has been set and determined by [Cahill] and Cameron Survey, with pegs on both sides which will be verified by the surveyor. 2. The fence will be a new colorbond fence in a basalt colour and being the same material as the current fence, with extra-long posts of 2.7m as discussed and requested by you. 3. The fence will be constructed by our clients and their team of employees at D&MD Building Services. We note that our client has 30 years expertise as a licensed builder. For the fence to be built to the highest quality, we are instructed that construction is required to be carried out over a period of not more than 36 hours. We note that the fence cannot be built in stages due to the concrete setting of posts. We are instructed that any variation to this construction method would likely result in issues with the finished product if wind or disturbance arise. This could potentially cause the fence to not be straight, true and plumb. We are instructed that the fence must be constructed in a manner of placing posts and rails on day 1, allowing the posts to set, then installing infill panels the following day. 4. That the two (2) trees, as mentioned in the proceedings, are to be trimmed to facilitate construction of the fence. We are instructed that this will be done so with no more than required, being 100m to tree 1 and 200m to tree 2. We note that this may be actioned from our clients' property, and will not be visible on your side, given the location of the proposed fence along the boundary. Our clients are willing to engage a suitably qualified arborist to be onsite to oversee the tree trimming. 5. The concrete cutting will be actioned in a professional and building like manner, with a smooth edge in a straight line to correct the boundary line. We emphasise that the boundary line will be marked and verified to surveyor's pegs. We also note that it is normal building practice to leave sufficient space for future works (if required). Further, we note that the 50mm gap suggested will be filled with a blue metal under the fence as discussed and requested by you. We are instructed that the proposed works do not require any approval from Council, as they are considered to be exempt works pursuant to State Environmental Planning Policy (Exempt and Complying Development Codes) 2008. 6. On the basis of the above, you withdraw / discontinue your Summons and all related Notices of Motion. 7. Our clients pay you $5,954 in full and final payment of costs in these proceedings. 8. Commencement of works to begin 30 October 2023 at 7am and to finish at no later than 31 October 2023 at 5pm. 9. Subject to work being carried out as outlined above, you agree to not commence any further actions or carry out any activities that would delay or prevent the constructions of the new fence. This offer is open for acceptance until Midday (12pm) on Wednesday 25 October 2023. Why should this offer be accepted We again confirm that this offer is made with reliance upon the principles established in Calderbank v Calderbank. This offer has been made as a compromise to the conditions outlined in your letter of offer dated 16 October 2023. The offer aims at providing a just, quick and cheap solution to resolve this dispute. Our clients have considered the requests made during mediation and it is our opinion that this offer is an equilibrium and seeks a fair outcome for all parties. Our clients have provided a high level of detail in the offer so that you would have full confidence and clarity in the exact works proposed to be undertaken. We would typically provide an extended period for the offer to be accepted, however, given the matter is listed for determination on 31 October 2023, our clients must have sufficient time to prepare for the hearing if the offer is not accepted.
The offer was stated to expire on 25 October 2023 at 12.00 pm. It was not accepted by Slattery.
On 17 October 2024 the Dunns made an offer in open Court to settle the entirety of the proceedings in the amount of $5,954. The offer expired at 5.00 pm on Friday, 18 October 2024, that is, prior to the hearing on 21 October 2024.
Finally, at 11.41 am during the hearing on 21 October 2024, the Dunns repeated in writing their offer to pay $5,954 in full and final settlement of the proceedings, including the costs hearing. The offer was expressed to be open until 1.30 pm that day. It was rejected by Slattery.

Issues for Determination on the Costs Application

Although neither party complied with the Court's order to file and exchange brief written submissions by 9.00 am on 21 October 2024, based on Slattery's earlier written submissions (set out in her affidavit) and oral argument of the parties, the following issues for determination emerged: 1. whether having effectively discontinued the proceedings, Slattery was entitled to her costs; 2. whether the determination of the Class 2 proceedings amounted to a supervening event; 3. whether the costs claimed were properly incurred in the Class 4 proceedings or were they incurred in the Class 2 proceedings, and therefore, beyond the purview of any award of costs in the Class 4 proceedings; 4. the effect, if any, of the various purported offers of compromise by Slattery and the parties' Calderbank letters. That is, was either party entitled to their costs payable on an indemnity basis; and 5. who was liable for the costs of the costs hearing.

Costs Where There Has Been No Final Determination on the Merits

It is convenient to deal with the first two issues together.
The Court's power to award costs in civil matters is conferred by s 98(1) of the CPA, which relevantly provides that: 98 Courts power as to costs (1) Subject to rules of court and to this or any other Act - (a) costs are in the discretion of the court, and (b) the court has full power to determine by whom, to whom and to what extent costs are to be paid, and (c) the court may order that costs are to be awarded on the ordinary basis or on an indemnity basis.
The power to award costs in s 98 of the CPA has been modified by rr 42.1 and 42.2 of the UCPR: 42.1 General rule that costs follow the event Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs. 42.2 General rule as to assessment of costs Unless the court orders otherwise or these rules otherwise provide, costs payable to a person under an order of the court or these rules are to be assessed on the ordinary basis.
Rule 42.20(1) of the UCPR further states: 42.20 Dismissal of proceedings etc (1) If the court makes an order for the dismissal of proceedings, either generally or in relation to a particular cause of action or in relation to the whole or part of any claim, then, unless the court orders otherwise, the plaintiff must pay the defendant's costs of the proceedings to the extent to which they have been dismissed.
The power to order costs is discretionary (Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534). The presumptive rule is that "costs follow the event", subject to any disentitling conduct. This is consistent with the principle articulated by the High Court in Latoudis (at 566-567) and Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 (at [67]) that costs, being compensatory and not punitive in nature, should be awarded to the successful party. However, the usual order for costs is not a rigid rule (Oshlack at [86] and Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513 at 537).
The "event" usually refers to the event of the claim and ought to be understood as referring to the "practical result" of a particular claim (Sze Tu v Lowe (No 2) [2015] NSWCA 91 at [39] and Nadilo v Eagleton [2021] NSWCA 232 at [6]-[12]).
The presumptive rule is more difficult to apply when there has been no hearing on the merits and the proceedings have been resolved by either the applicant abandoning the claim or the respondent capitulating. In these circumstances the Court is deprived of the factor that usually determines whether, or how, it will exercise its discretion to award costs (Ballina Shire Council v Leadbeatter [2023] NSWLEC 12 at [74]).
In Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622, the applicant applied for the costs of a proceeding that she had instituted in the High Court appealing the Refugee Review Tribunal's decision to affirm the relevant Minister's refusal of her protection visa application. One week after she commenced proceedings, the Minister granted her a protection visa. Having obtained the relief that she sought, she abandoned her action. After setting out the applicable legal principles, McHugh J held that there should be no order for costs (at 624-625). His Honour reaffirmed these principles in Oshlack (at [67]-[69]).
The principles are well established and have been applied in numerous cases both in this and other courts. They were recently and succinctly set out by Robson J in Leadbeatter, which I gratefully adopt (at [75]-[76]): [75] In summary, the absence of a hearing on the merits of the proceedings will usually mean that the Court will make no order as to costs, subject to a qualification that even where parties have acted reasonably, costs may be awarded if the Court is satisfied that one party "was almost certain to have succeeded if the matter had been fully tried", adopting the well-known comments of McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 at 624-625; [1997] HCA 6 (Ex parte Lai Qin). [76] Further, the circumstances leading to the discontinuance of the proceedings and the conduct of the parties are relevant in the exercise of the Court's discretion: Ralph Lauren 57 Pty Ltd v Byron Shire Council [2014] NSWCA 107; (2014) 199 LGERA 424 at [20]-[34]. The position may be different where a respondent simply capitulates: Nadilo v Eagleton [2021] NSWCA 232; (2021) 250 LGERA 89 (Nadilo) at [12], [89], [94].
In Kiama Council v Grant [2006] NSWLEC 96; (2006) 143 LGERA 441 Preston J also elucidated the costs principles to be applied where there has been no hearing on the merits (at [43]-[79]). His Honour's pellucid summary of the discussion, which I also respectfully adopt, was as follows (at [80]): 80 The principles that emerge from these cases are that in a civil enforcement or judicial review case where there has been no hearing on the merits: (a) where one party effectively surrenders to the other party by: (i) discontinuing without the consent of the other party; or (ii) giving undertakings to the Court or submitting to the Court making orders against the party substantially in the terms or to the effect claimed by the other party; the proper exercise of the costs discretion will ordinarily be to make the usual order as to costs, unless there is disentitling conduct on the part of the other party; and (b) where some supervening event or settlement so removes or modifies the subject of the dispute that no issue remains except that of costs, the proper exercise of the costs discretion will ordinarily be to make no order as to costs unless: (i) one of the parties has acted so unreasonably that the other party should obtain the costs of the action; or (ii) even if both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried so that the party should obtain the costs of the action.
In Nadilo Preston J relevantly opined as follows (at [93]-[94]): 93 The proper inquiry was to look to the substance not the form of the relief sought in the summons. When this is done, it can be clearly seen that the applicant succeeded in achieving in substance the relief she had sought. The present matter involved "a clear winner", to use the words of Burchett J in ONE.TEL Ltd v Commissioner of Taxation (2000) 101 FCR 548; [2000] FCA 270 at [7]. 94 Establishing that the applicant would inevitably have succeeded is necessary, but insufficient; there needs also to be the extra circumstance that the respondents' conduct in defending the proceedings up to the time they agreed to the primary judge making consent orders was unreasonable: Ralph Lauren 57 Pty Ltd v Byron Shire Council at [1], [2], [23], [26], [27], [33], [108]. Again, this question of the unreasonableness of the respondents' conduct needs to be viewed practically and substantively, not by focusing on the precise terms of the summons or the pleadings.
The need to demonstrate unreasonableness to obtain an "order otherwise" was, however, eschewed by Brereton JA (and Meagher JA at [1]) in the same case. There his Honour stated (at [12]): 12 Like Burchett J in ONE.TEL, I do not consider that in circumstances where one party effectively capitulates, rendering further litigation unnecessary, without any element of compromise, it is necessary to demonstrate "unreasonableness" to obtain an "order otherwise". However, if there were such a requirement, the respondents' persistence in defending the proceedings, rather than availing themselves earlier of any opportunity to avoid the applicant incurring costs, would satisfy it. The respondents had every opportunity to avoid the applicant incurring costs: they could have installed compliant machinery in the first place; they could have rectified it before proceedings were commenced; they could have rectified it promptly after proceedings were commenced; and they could have conceded at any earlier stage of proceedings that they were bound to rectify it. To defend the proceedings rather than to take any of those steps was, in the relevant sense and context, unreasonable.
This sentiment is difficult to reconcile with the decision in Ralph Lauren 57 Pty Ltd v Byron Shire Council [2014] NSWCA 107; (2014) 199 LGERA 424 (at [23]-[27], [33] and [108]). Nevertheless, Nadilo being later in time and binding on me, I will apply it.
In the present case, the abandonment by Slattery of the substance of her claim was caused by the supervening event of the result in the Class 2 proceedings, which had the effect of removing the subject-matter of the Class 4 dispute save as to costs.
Although Slattery submitted that the Dunns had acted unreasonably in delaying resolution of the proceedings by seeking a boundary determination, this submission cannot be accepted. It was the boundary determination that resolved once and for all where the new fence ought to be constructed, a matter relevant to the Class 2 and Class 4 proceedings. The determination had the effect of settling the evidentiary dispute between the surveyors. Their actions were, in my view, entirely reasonable.
Nor can it be said that the Dunns' decision to commence and continue with the Class 2 proceedings was unreasonable. As can be seen from the Acting Commissioner's judgment and orders, both parties enjoyed success before Douglas AC.
In the present case can it be said that there is a "clear winner"? To the extent that Slattery obtained the interim relief that she sought, she clearly won those applications. The practical result of the interim relief was that the Dunns were prevented from undertaking the very acts notified to Slattery that they intended to carry out at 7.00 am on 9 October 2023. On any view, and having regard to the jurisdictional constraints of both courts, she is entitled to the costs of commencing the proceedings in both the Supreme Court and this Court and the costs of the interlocutory applications. Those costs must logically include the costs associated with the extension of the interim relief.
Similarly, having regard to the totality of the Class 4 proceedings, Slattery is the "clear winner" insofar as she has effectively obtained the relief that she sought in the summonses. Demolition of the entire fence will not occur, the fence works permitted to be carried out are to be those ordered by the Court and there is to be no digging, scraping or cutting of the paperbark trees allowed.
Although as drafted, no breach of the law is identified by Slattery in the summonses, enlivening her claim for final injunctive relief, in light of the fact that she was unrepresented when she commenced the proceedings, this ought not be fatal to any costs claim. The significance of the omission is that it renders it more difficult to conclude that she would have succeeded if the matter had been fully tried. But having said this, at no juncture was any defect in the summons raised with her.
Looking at the substance of the summons rather than its form (Nadilo at [93]), Slattery ought to be awarded her costs. She has been successful in the litigation and achieved the relief that she sought to obtain.
If, contrary to Nadilo, unreasonableness is a requirement, while I do not consider that the Dunns acted unreasonably in seeking to rely on the Cahill survey or in obtaining a boundary determination thereby resulting in numerous adjournments of the proceedings, I nevertheless find that the Dunns could have avoided the proceedings altogether by not threatening to demolish the fence in the manner that they did. Their actions all but compelled Slattery to commence proceedings immediately and to seek urgent relief. This was unreasonable behaviour on their part. Also unreasonable was their failure to appear at the hearing of the notices of motion in the Supreme Court and this Court in circumstances where they were notified of the applications. Had they appeared and provided suitable undertakings, continuation of the proceedings may have been avoided. Many of the costs that Slattery now seeks recompense for were incurred by her at the commencement of the proceedings.
For these reasons Slattery is entitled to the costs of the proceedings.

Were the Costs Properly Incurred in the Class 4 Proceedings?

The Dunns argued that because of a paucity of evidence permitting the determination of whether the costs claimed were properly incurred in the Class 4 proceedings and not the Class 2 proceedings, the appropriate order ought to be that each party bear their own costs.
Exhibited to Slattery's affidavit and tendered to the Court was evidence demonstrating that almost all of the costs claimed by her may be properly attributed to the Class 4 proceedings. In any event, this is a matter for a costs assessor to determine and not the Court on this application. It is not a basis for the Court to exercise its discretion to deny Slattery an award of costs.

The Effect of the Written Offers to Settle the Proceedings

Slattery claims her costs on an indemnity basis from the date of the service of the 16 October 2023 offers.
Offers of compromise are governed by r 20.26 of the UCPR which relevantly states: 20.26 Making of offer (1) In any proceedings, any party may, by notice in writing, make an offer to any other party to compromise any claim in the proceedings, either in whole or in part, on specified terms. (2) An offer under this rule - (a) must identify - (i) the claim or part of the claim to which it relates, and (ii) the proposed orders for disposal of the claim or part of the claim, including, if a monetary judgment is proposed, the amount of that monetary judgment, and (b) if the offer relates only to part of a claim in the proceedings, must include a statement - (i) in the case of an offer by the plaintiff, as to whether the balance of the proceedings is to be abandoned or pursued, or (ii) in the case of an offer by a defendant, as to whether the balance of the proceedings will be defended or conceded, and (c) must not include an amount for costs and must not be expressed to be inclusive of costs, and (d) must bear a statement to the effect that the offer is made in accordance with these rules, and (e) if the offeror has made or been ordered to make an interim payment to the offeree, must state whether or not the offer is in addition to that interim payment, and (f) must specify the period of time within which the offer is open for acceptance.
If an offer pursuant to r 20.26 of the UCPR is made, r 42.14 of the UCPR is engaged and provides the following in respect of costs where an offer is made by a plaintiff and not accepted and judgment is no less favourable to the plaintiff: 42.14 Where offer not accepted and judgment no less favourable to plaintiff (1) This rule applies if the offer is made by the plaintiff, but not accepted by the defendant, and the plaintiff obtains an order or judgment on the claim no less favourable to the plaintiff than the terms of the offer. (2) Unless the court orders otherwise, the plaintiff is entitled to an order against the defendant for the plaintiff's costs in respect of the claim - (a) assessed on the ordinary basis up to the time from which those costs are to be assessed on an indemnity basis under paragraph (b), and (b) assessed on an indemnity basis - (i) if the offer was made before the first day of the trial, as from the beginning of the day following the day on which the offer was made, and (ii) if the offer was made on or after the first day of the trial, as from 11 am on the day following the day on which the offer was made.
There are at least two difficulties with the 16 October 2023 offers: 1. first, they did not bear an express statement to the effect that the offer was made in accordance with r 20.26 of the UCPR as required (r 20.26(2)(d)). There was no reference whatsoever to Pt 20 or even the UCPR in the offers (cf Koprivnjak v Koprivnjak (No 2) [2023] NSWCA 62 at [21] and Dibbs v Emirates (No 2) [2015] NSWSC 1786 at [17]); and 2. second, they included an amount for costs contrary to r 20.26(2)(c).
This means that the 16 October 2023 offers are not offers of compromise for the purpose of r 20.26 of the UCPR, and therefore, Slattery cannot avail herself of r 42.14 of the UCPR to claim indemnity costs.
Nevertheless, Slattery can have the deficiency in her 16 October 2023 offers addressed by the offer taking effect as a Calderbank offer (see Dibbs (No 2) and the appellate authority referred at [25]).

Effect of the Calderbank Offers

Both parties exchanged purported Calderbank offers. In Slattery's case these were the 16 October 2023 offers, and in relation to the Dunns, these included the letter dated 23 October 2023, arguably the counter-offer made by them on 16 October 2023 and the offer made on 21 October 2024.
The relevant legal principles to be applied were stated at length in this Court in Verde Terra Pty Ltd v Central Coast Council; Central Coast Council v Environment Authority (No 11) [2023] NSWLEC 110 (at [57]-[67]). They were summarised in Edmonds v Barrington Winstanley Group Pty Ltd (No 2) [2023] NSWCA 197 as follows (at [5]-[7]): 5 There is no presumption that a party who does not accept a Calderbank offer and does not obtain a more favourable judgment will necessarily pay indemnity costs from the date of that offer: Leichhardt Municipal Council v Green [2004] NSWCA 341 at [19] (Santow JA, Bryson and Stein JJA agreeing); Tati v Stonewall Hotel Pty Ltd (No 2) [2012] NSWCA 124 at [9] (Bathurst CJ, Allsop P and Beazley JA agreeing). 6 Whether or not indemnity costs should be ordered where a party does not accept a Calderbank offer depends upon whether it was a genuine offer of compromise and whether the offeree acted unreasonably in all the circumstances in refusing the offer, tested as at the time the offer is made and not with the benefit of hindsight resulting from a known outcome recorded in a judgment: Miwa Pty Ltd v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [8], [11] (Basten JA, McColl and Campbell JJA agreeing); Krolczyk v Winner t/as J Winner Building Services [2022] NSWCA 196 at [217] (Griffiths AJA, White and Kirk JJA agreeing). 7 The relevant principles were summarised by Ward CJ in Eq (as her Honour then was) in E Group Security Pty Ltd v Chief Commissioner of State Revenue (No 2) [2021] NSWSC 1296 at [59]-[60]: "59 The factors to be taken into regard when considering whether the rejection or non-acceptance of the offer was unreasonable include: the stage of the proceeding at which the offer was received; the time allowed to the offeree to consider the offer; the extent of the compromise offered; the offeree's prospects of success assessed as at the date of the offer; the clarity with which the terms of the offer were expressed; and whether the offer foreshadowed an application for indemnity costs in the event of the offeree's rejecting it (see Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298 at [25] per Warren CJ, Maxwell P and Harper AJA; Commissioner of State Revenue v Challenger Listed Investments Ltd (No 2) [2011] VSCA 398 at [8] per Buchanan and Tate JJA and Sifris AJA; Miwa Pty Ltd v Siantan Properties Pty Ltd (No 2) [2011] NSWCA 344 at [12] per Basten JA (with whom McColl and Campbell JJA agreed)). 60 The defendant has pointed in his submissions to various factors that in other cases have been found to be relevant in determining whether the rejection of a Calderbank offer was not unreasonable, and tending against such finding, including: all relevant evidence not having been served at the time of the offer (Vale v Eggins (No 2) [2007] NSWCA 12 at [22]); the full parameters of the dispute remaining uncertain at the time of the offer (Precision Products (NSW) Pty Ltd v Hawkesbury City Council (2008) 74 NSWLR 102; [2008] NSWCA 278 at [192]); the offeror's case changing after the making of the offer (South Eastern Sydney Area Health Service at [85]); the inclusion of conditions in the offer (Magenta Nominees Pty Ltd v Richard Ellis (WA) Pty Ltd (unreported, FCAFC, Spender, French and Lee JJ, 29 August 1995); and the issues in dispute in the proceedings being complex (MGICA (1992) Pty Ltd v Kenny & Good Pty Ltd (No 2) (1996) 70 FCR 236 at 242D)."
The onus is on the party relying upon the Calderbank offer to satisfy the Court that it should exercise the costs discretion in its favour (Commonwealth of Australia v Gretton [2008] NSWCA 117 at [46]).
I accept that the 16 October 2023 offers by Slattery were genuine offers of compromise. However, I do not accept that the Dunns acted unreasonably in refusing them. This is because at the time they were made, the location of, and need to, demolish and replace the existing fence was still in dispute but there was no mention of the fence in the 16 October 2023 letters. At this nascent stage of the proceedings, the Dunns were in possession of the Cahill survey that indicated that the fence was encroaching onto their property. The Terry survey did not come into existence until 25 October 2023. As it transpired, subject to some minor encroachment the fence was in the correct location. However, this was not determined until after the boundary determination in February 2024. In addition, at no point did Slattery agree to replace any part of the existing fence because in her view, it was adequate. This may be contrasted with the findings made by Douglas AC in the Class 2 proceedings, who ordered Slattery to replace, at her expense, several fence posts and panels. In all of these circumstances, it was not unreasonable for the Dunns to reject the 16 October 2023 offers.
Turning to the offers made by the Dunns, neither the offer made on 23 October 2023, nor the counter-offer made by them on 16 October 2023, were offers for the purpose of r 20.26 of the UCPR. They likewise made no reference to the UCPR and were inclusive of costs. In these circumstances, neither rr 42.15 nor 42.15A of the UCPR are engaged (no submission to this effect was made by the Dunns during the costs hearing).
Insofar as it may be argued that the 16 October 2023 offer by the Dunns purported to be a Calderbank offer, it was a genuine offer of compromise by the Dunns. However, it was not unreasonably rejected by Slattery given her belief at that time that the condition of the fence was adequate, that the fence was in the correct location and given that she had not yet obtained the Terry survey. Furthermore, the offer did not stipulate that indemnity costs would be sought in the event that it was rejected. No entitlement to indemnity costs arises from this offer.
Was the Calderbank offer dated 23 October 2023 effective in enlivening the Court's discretion to award indemnity costs? In my view, it was not. Again, while the offer amounted to a genuine attempt by the Dunns to resolve the proceedings, at this early stage of the matter, that is, prior to Slattery having received the Terry survey, it was reasonable for her to reject the offer. This is particularly the case in circumstances when she did not accept that the fence required replacement. Similarly, the Calderbank letter did not foreshadow an application for indemnity costs in the event of the offeree rejecting it.
Finally, and for the sake of completeness, for reasons similar to those articulated above, the offer made by the Dunns on 21 October 2024 is neither an offer of compromise for the purpose of r 20.26 of the UCPR nor does it enliven any discretion by the Court to award indemnity costs pursuant to the principles espoused in Calderbank. By this late stage of the proceedings, Slattery's legal costs were far in excess of the amount offered, especially given that she was legally represented at the cost hearing (as foreshadowed by her when the matter was mentioned before the Court on 17 October 2024).
It follows from the reasons above, that neither party is entitled to their costs paid on an indemnity basis.

Costs of the Motion

Although resisted by the Dunns, Slattery ought to be awarded her costs of the costs application, in respect of which, apart from seeking her costs payable on an indemnity basis, she was otherwise successful. The overwhelming majority of the costs hearing was consumed with argument concerning her entitlement to have her costs paid; not the basis upon which they ought to be paid. It would be inappropriate to award her only a proportion of her costs of the costs hearing and I decline to do so.
It remains the fact that, contrary to various orders of the Court, the Dunns offered no evidence and scant submissions in reply to those provided to the Court by Slattery in support of her application for costs. I have already rejected their argument that they were unable to do so because Slattery was five days late serving her evidence.

Orders

In conformity with the reasons provided above, the orders of the Court are that: 1. the first and second respondents are to pay the applicant's costs of the proceedings, including the costs of the costs application; 2. such costs are payable as assessed on an ordinary basis; 3. the summons is otherwise dismissed; and 4. the exhibits are to be returned.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 24 October 2024

(2006) 143 LGERA 441

(2014) 199 LGERA 424

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